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The cheapest way to pay someone with a credit card

The cheapest way to pay someone with a credit card
Image source: Getty Images

If you owe someone money but you don’t want to use your bank account to pay them, investigating the cheapest ways to pay with a credit card could be the answer.

There are a number of ways you can do this, but many involve hefty fees and charges. However, it is possible to minimise these fees by choosing your payment method carefully.

So, here we have listed the cheapest ways to pay someone with a credit card.

1. PayPal

In order to do this, both you and the recipient of the money will need a PayPal account. A PayPal account is quick and easy to set up. Follow the instructions on the website.

Once you have both registered, add your credit card to the account. If you have more than one card registered to your account, make sure the credit card you want to use for the payment is the ‘preferred’ card. The recipient will need to add their bank account details to their account. This will enable a transaction from your credit card to their bank account.

Log onto your account and select the option for making a payment for friend or family. You will need the email address that the recipient used to open their account. Add the amount and follow the instructions. You will receive confirmation of the transaction via email. The recipient should receive the funds in 3 to 5 days.

This is one of the cheapest ways to pay someone with a credit card, because this type of transaction is free. However, you will be charged if you are paying the recipient in a foreign currency, so try to avoid doing this.

2. Money transfer card

You could apply for a credit card that offers a special deal on a money transfer. If you apply and are accepted, then request the money transfer sooner rather than later. These types of cards tend to offer special deals for a limited period only.

The card provider will transfer the money to your bank account, and you can then use this money to pay the debt.

You will be charged a one-off fee for the money transfer and could be charged a rate of interest on the balance on the credit card. Some cards offer 0% interest for a limited period in addition to a typical one-off charge of 4% of the total amount transferred. You can check out the best balance transfer and money transfer credit cards here.

3. Make a purchase

If you owe someone money and they are about to make a purchase which is worth the same amount, you could offer to make the purchase for them with your credit card.

This could be one of the cheapest ways to pay someone with a credit card, as long as you are making the purchase in the UK with a UK-based credit card. Bear in mind that you may be charged a transaction fee for using a credit card.

Make sure you keep the receipt in case there is a problem with the goods or services being purchased. Your credit card company is jointly liable for any breach of contract by the retailer under Section 75 of the Consumer Credit Act. So, you could claim a refund if there is a problem with a purchase worth more than £100.

Take home

Make sure you keep proof of payments made to the person you owe money. This will avoid any problems later.

Bear in mind that the fees and charges outlined are for the transactions only. If you have an outstanding balance on your credit card and you are not paying the balance in full every month, you will accrue additional charges and interest. If this is the case, you will need to take this into account when working out the true cost of paying off the debt with a credit card.


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